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Lennar (LEN) Gains As Market Dips: What You Should Know

Zacks Equity Research

Lennar (LEN) closed the most recent trading day at $59.40, moving +1.11% from the previous trading session. This change outpaced the S&P 500's 0.32% loss on the day. Elsewhere, the Dow lost 0.38%, while the tech-heavy Nasdaq lost 0.4%.

Coming into today, shares of the homebuilder had gained 2.55% in the past month. In that same time, the Construction sector gained 1.4%, while the S&P 500 gained 2.51%.

LEN will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.90, down 3.06% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.70 billion, up 3.67% from the prior-year quarter.

Any recent changes to analyst estimates for LEN should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. LEN is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that LEN has a Forward P/E ratio of 9.81 right now. Its industry sports an average Forward P/E of 9.99, so we one might conclude that LEN is trading at a discount comparatively.

We can also see that LEN currently has a PEG ratio of 1.09. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Building Products - Home Builders industry currently had an average PEG ratio of 1.09 as of yesterday's close.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 31, putting it in the top 13% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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